7 Limits You Can (and Should) Place on Unlimited PTO

June 15, 2017 | BizRun Team

There are many reasons why you might consider transitioning to an unlimited PTO policy. Doing so can improve employee retention, reduce your financial liability and make happier employees. In fact, 69% of professionals say that they would be more likely to take a new job if the company offered unlimited PTO.

But how can you ensure that your staff won’t abuse such a generous time off policy? Here, we look at a few ways you can keep checks and balances in place to ensure that your unlimited PTO plan doesn’t turn into an all-out party for your employees.

1. Limit who’s eligible

Under any PTO policy, you have the power to limit who gets access to it. If you want to set up eligibility so that new hires don’t get access to the unlimited PTO benefit until several months in, you’ll have assurance that they’re not there just to take advantage of the system.

Likewise, you might restrict part-time employees or contractors from getting the perk. Make it something employees earn or aspire to, and set thresholds for who qualifies.

2. Limit time off without a plan

You might fear (quite understandably) that employees who are given unlimited time off will take off at-will, leaving a pile of work on their desks that leaves their co-workers – and your business – in a bad spot. But again, this is within your control.

You can require them to present a plan for how their work will get done in their absence, especially if they’re taking off for more than a few days. If an employee is able to complete or get ahead on projects before his vacation, so much the better. If not, task him to make arrangements with a colleague to cover any hot or unanticipated projects. Then, get confirmation from the employee who has agreed to take on the work to ensure that all bases are covered.

3. Limit how many consecutive days can be taken

Unlimited time off doesn’t have to mean that it’s okay for someone to take off for weeks at a stretch. If you don’t want employees out of the office beyond a certain number of days, you can set limits to how many days each person can take off at any one time.

It’s not unusual to limit time off to two or three consecutive weeks. You do have a business to run, after all. As long as you clearly communicate expectations and requirements, you should be able to limit any potential negative impact.

4. Limit time off conflicts

You might also fear that several people in one department will take a significant amount of time off simultaneously. As part of the vacation request process, you can require that employees take on the responsibility of making sure their department is adequately staffed and that there aren’t conflicts with other key team members.

Decide how barebones a department can be and still function, and then state that if X number of people in a given department have already been approved for time off, no more requests can be made. Make this easier to implement by utilizing PTO tracking software that provides visibility for you – and for employees – to see what conflicts exist.

5. Limit how requests can be made

Just because you offer unlimited PTO doesn’t mean employees can take off whenever they feel like it. You still need a vacation request process. In your PTO policy, outline the steps for asking for time off and getting it approved. If longer vacation requests require additional components, like that work plan we mentioned earlier, make sure to specify those instructions as well.

Make it clear that your unlimited policy doesn’t mean that everyone is guaranteed to be approved for vacation requests. Outline potential reasons they might be declined, such as overlap with other requests or a busy period for the company.

6. Limit performance and productivity concerns

Many fear that unlimited PTO will lead to abuse of the policy by lazy or unmotivated workers. To remedy this, you must set clear expectations for performance and productivity for all employees. In fact, shifting your organization’s mindset to measure productivity in results, instead of hours worked, is the key to making unlimited PTO work.

Work with managers across your organization to devise performance expectations, metrics and goals for each employee, as well as conduct regular and consistent check-ins. If someone falls short, it will soon become obvious. And if this same employee is also taking an inordinate amount of time off, there will be clear grounds for a disciplinary discussion.

7. Limit the potential for abuse

Implementing an unlimited time off policy communicates that you trust your staff to do the right thing. You’re giving them the responsibility to decide how much time they take off. Be sure this is clearly conveyed and that your expectations are clear.

On the flip side, you should also deliberately spell out how suspected abuse will be addressed. To spot abuse, you’ll want to keep records of how many days each employee has taken. While this may seem to seem to conflict with one of the key benefits of offering the policy in the first place, tracking unlimited PTO has its own benefits.

You’ll be able to spot trends that show you how well your policy is working. For example, are employees taking more time off than they did under your previous policy or as compared to national averages? Are any employees taking what seems to be an excessive amount of time off? And, if so, have you reached out to their managers to be sure they’re meeting their performance goals?

On the other hand, tracking PTO can also help you identify employees who have taken no time off for an extended period time of time. You’ll want to know who isn’t taking time off so you can make sure they aren’t overworked or suffering from burnout. It could also signal a problem with a manager who could benefit from more training or an understanding of the importance of employee time off.

Ultimately, an unlimited PTO policy can be mutually beneficial for both your company and your employees. The increased focus on employee performance alone could drive significant business improvement. But the key to success lies in having clear expectations and clear limits so that everyone involved knows exactly what success looks like.